Avenue Supermarts – the company behind supermarket retail chain D-Mart – is likely to bring its IPO in the second-half of 2017. According to a report by the Mint business daily, the company has been discussing the IPO investment banks for the last three to four months. Lead banker for the upcoming IPO will be appointed soon, said the report citing unnamed people with knowledge of the matter.
When contacted, Neville Noronha, chief executive of Avenue Supermarts said the IPO for the retail chain is on cards but did not offer more details. “We have been evaluating an IPO and have initiated talks with various bankers. However, these discussions are still in the early stages,” Noronha told the newspaper.
Owned by renowned stock market investor Radhakishan Damani, D-Mart could eventually raise INR10-12 billion (INR1,000 – 1,200 crore) through the IPO.
D-Mart – Differentiated business model
The company started in 2002 with a single store in Mumbai but now boasts of presence in 110 locations across Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana and Chhattisgarh. The company has been opening anywhere between 10 to 15 stores every year. D-Mart aims to be the lowest priced retailer in the regions it operates. The company is a pure food and grocery retailer and stocks food, toiletries, beauty products, garments, kitchenware, bed and bath linen, and home appliances. The company follows a slightly differentiated business model of operating discount stores in suburbans which help in keeping costs low.
D-Mart is among the fastest growing modern retailers in India and has been prudent with its focus and costs. The company has resisted diversification into related verticals such as digital, home, apparel and footwear, something its rivals Reliance and Kishore Biyani’s Future Group have done. During the financial year ended March 2015, D-Mart posted a net profit of INR2.11 billion (INR211 crore) on revenues of INR64.5 billion (INR6,450 crore). This profit figure is better than Reliance Retail’s INR1.59 billion and Future Retail’s INR1.53 billion.